Even if it is really out of stock, bridge water may not be the next Lehman.
Wen | Liu Jing Gao Shimo
edit | Hong |
Bridgewater Associates, the world’s largest hedge fund, was suddenly involved in a rumor of liquidity risk.
This news broke out from a WeChat group chat on the morning of March 18. Some of them said: “Just received the wind … Bridgewater exploded”, and made a simple combing of the core problems facing Bridgewater at this stage, mainly including three aspects: the strategic mistake of turning from short to long; the possibility of redemption of Saudi funds ; And the current risk of withdrawing the market.
In the context of three consecutive US circuit breakers within 8 days, such frustrating information seems to have wings spread across the entire financial circle in an instant.
But at present, the authenticity of the news is still in doubt. Qiaoshui’s headquarters is located in Connecticut, USA, but the news about its liquidation came from the Chinese market, which seems unreasonable. In the afternoon, the circle of friends who were suspected of being part of the group chat also responded: it originally reported a newsletter from the US investment circle, which was intended to explain the recent huge market fluctuations. It emphasized that the group screenshot information is incomplete and that “all statements represent only personal opinions.”
Even so, the Bridgewater Fund has indeed been anxious.
Bearing first is Qiaoshui’s own bleak performance. Bridgewater ’s flagship product, Pure Alpha Fund II, has fallen by about 13% during the period up to the 12th of this month and has fallen by about 20% this year. About half of the $ 160 billion in bridge water is in the funds that use the strategy. The failure of the Pure Alpha strategy was attributed to some people: long positions in the stock market and short positions in government bonds.
Explain here. In the fund operation of Qiaoshui, Alpha and Beta are separate investment strategies. These two investment models also correspond to corresponding investment funds: the former is Pure Alpha and the latter is All Weather. , Also known as 24/7 hedge funds.
In simple terms, Pure Alpha is a traditional hedging strategy that actively trades in different asset directions, such as stocks, bonds, commodities, currencies, etc. During the financial crisis in 2008, the Pure Alpha fund had soared 10%. The core idea of the all-weather strategy is to “separate the economy and the market into different components, study the different relationships of these components at different times, and then understand the economic machine.” Since Qiaoshui launched the all-weather trading strategy in 1996 to 2006, its management scale has soared from US $ 200 million to US $ 60.7 billion.
In addition to its poor performance,A widely circulated letter on Wall Street also made Bridgewater “lay a gun”. The author quoted “an old Goldman Sachs friend” as saying: “The Bridgewater Fund is facing a large-scale redemption from Saudi Arabia and other countries, and this has caused the fund to experience some more violent fluctuations (gold, , Stocks, and foreign exchange).
Coincidentally, just before the “out of stock rumor”, Bridgewater Daily Observations on March 18 seemed to be a response to a series of recent rumors. This is a daily newspaper released by Qiaoshui to its investors and global dignitaries. The information is not open to the public.
It not only shows the performance of its funds, but also explains the performance accordingly. It states that the net income of both Alpha and Beta funds has declined, and one of the Pure alpha funds has fallen by as much as 21%. Bridgewater explained this: “Neocrown virus, a global epidemic, came suddenly and hit our worst moments because we have more long positions in our portfolio, which is also a long tail risk in our investment strategy. , Because we ’ve been using the liquidity of the financial / economic system and low interest rates to earn money and earn the difference relative to other high-return assets. “
In short, long positions are mainly due to bullish economics, and Qiaoshui’s statement is emphasizing that there is no obvious sign of economic downturn in doing this investment behavior.
Qiaoshui also admits the fact of investment loss, but believes that this loss is within its tolerable range, and said that the current retreat behavior is to avoid larger losses that may face in the future. “As in the past, we maintain our own liquidity so that we can adjust our portfolio based on changing conditions. Although we lost some money this time, this loss is within an acceptable range. This gives us the ability Recover from it and guarantee liquidity, and adjust your position to ensure investor liquidity instead of profiting from it.
After the rumor broke, someone said that Bridgewater was on a par with Lehman Brothers. It is generally believed that the bankruptcy of Lehman was a sign of the overall outbreak of the financial crisis in 2008. But other than the low reliability of the bridge water explosion warehouse message itself, the two are actually not very comparable.
This is because Qiaoshui is an asset-light operation fund manager. It usually does not need to invest a lot of its own funds. When losses increase, the problem it faces is more customer loss. Lehman is an investment bank with a high leverage ratio in its business form. It has participated in and held a large number of MBS ( Mortgage-Backed Security, mortgage-backed bonds or mortgage securitization). The serial Wall Street crisis.
On October 19, 1987, the famous “Black Monday” in the New York stock market, when the vast majority of people stood on the roof of the NYSE building, the Bridgewater Fund made up to 22% of profits. The media described it as “October Hero”; in the financial crisis of 2008, under the condition that the hedge fund industry lost an average of 19%, Qiaoshui still achieved positive returns, and in 2009 it ranked first in the U.S. peers; Ross’s annual income in 2016 With a loss of 1 billion U.S. dollars and a loss of 3 billion U.S. dollars, Bridgewater’s annual income reached 4.9 billion U.S. dollars, ranking the top 20 in the world’s top hedge funds …
This is thanks to the bridgewater investment philosophy mentioned above: Emphasizing the coexistence of alpha and beta logic. Simply put, is to leverage low-risk assets and deleverage high-risk assets. And compared to most hedge funds, the skillful hand of leverage is low, basically maintained at about 3 times, while the average hedge fund is 8-10 times.
Two years ago, Ray Dalio said in an interview , attributed these achievements to his Principles, “The most critical factor for my success is principles.” His book “Principle” has also become a “red book” in the Chinese business circle.
Ray Dalio obviously relies heavily on the Chinese market. In July 2018, Bridgewater completed the registration of private equity fund managers, and officially became the first batch of foreign private equity managers in China. Three months later, a product named “Qiaoshui All Weather China Private Equity Investment Fund No. 1” was completed. Its Beijing office is located on the 47th floor of China World Trade Center III, opposite the original Apple office. In less than a year since then, Bridgewater’s Chinese staff has expanded to 20 people.
As of now, Bridgewater Fund has not commented on the rumors.
The latest news about Bridgewater is that it has established a short position of US $ 14 billion on March 17th, betting that the stocks of European companies will continue to plummet as the outbreak of the new crown virus. However, some comments pointed out that the above bets were not enough, “not enough to protect the company’s main hedge fund from huge losses.”